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Importers and exporters to monitor for suspicious financial transactions

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Pakistan has begun to verify importers / exporters’ commercial transactions and suspected financial activities for possible cases of “proliferation financing” involving the transfer and export of technology, goods, software, services or data. expertise that can be used in the manufacture of weapons. nuclear, chemical or biological. related programs that pose a significant threat to global security.

In this regard, the Karachi Financial Monitoring Unit (FMU), the State Bank of Pakistan (SECP), the Federal Revenue Board (FBR) and the Securities and Exchange Commission of Pakistan (SECP) have requested cases of proliferation financing. pertaining to the transfer and export of technology, goods, software, services or specialized knowledge that can be used in nuclear, chemical or biological weapons programs that pose a significant threat to global security.

Under the FMU circular issued Friday to SBP, SECP, FBR, ICAP and DG FMU, under Section 7 (1) of the Anti-Money Laundering Law of 2010, reporting entities must report suspicious transactions (DOS) to the Financial Control Unit for all activities related to money laundering (ML) / terrorist financing (FT) / proliferation financing (PF).

To identify a suspicion that could indicate proliferation financing, the UFA has developed warning indicators specifically to help reporters, which are enclosed as “Funding Warning Indicators. of proliferation ”.

These red flags may seem suspicious on their own; however, it could be argued that a single red flag would not be a clear indicator of potential proliferation financing activities. However, a combination of these red flags, along with an analysis of overall financial activity and customer profile, could point to potential proliferation financing activities, FMU added.

UFA indicated that in order to identify a suspicion that could indicate proliferation of fundraising activities, UFA has established red flag indicators specifically designed to help reporting entities. These red flags may seem suspicious on their own; however, it could be argued that a single red flag would not be a clear indicator of potential proliferation financing activities.

A combination of these warning signs, in addition to the analysis of the expected overall financial activity, could indicate the company profile of a potential sprawl of financial activity.

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Customer behavior (red flags)

When a customer is involved in the supply, sale, supply or purchase of proliferation sensitive military or dual-use items, particularly in high-risk jurisdictions.

When a customer or counterparty, or its address, is the same or similar to that of a person or entity on publicly available sanctions lists. The client is an investigative body associated with a jurisdiction with a high risk of proliferation.

When the customer’s activities do not match the business profile provided to the reporting entity.

When a customer is vague about beneficial ownership and provides incomplete information or opposes when asked for additional information.

When a customer uses complicated structures to hide the connection of imported / exported goods, for example, he uses tiered letters of credit, shell companies, middlemen and brokers.

When a broker is listed as the final destination of the product in the commercial documents.

When the final destination of the goods to be imported / exported is not clear in the trade-related documents provided to the reporting entity.

Transactional models (red flags)

Financing of complex projects and loans, in the presence of other objective factors such as an unknown end-user. The transactions involve a person or entity in a country where proliferation is important. The transaction (s) related to dual-use, proliferation-sensitive or military goods, whether or not licensed.

The transaction (s) include the shipment of goods which are not in accordance with normal geographic trade patterns, i.e. where the country concerned does not generally export, import or consume the types of goods in question. ask.

Over / under billing for military or dual-use goods, proliferation sensitive, commercial transactions. 6. When the country of destination / dispatch of the goods is different from the country where the product was shipped / received without any plausible reason, he added.

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Lahore Herald is a Pakistani internet media company based in Lahore, it began operations as a social news and entertainment company with a focus on digital media in 2020. Lahore Herald is a new media company that creates relevant and engaging content for a young, inquisitive, opinionated, empathetic and bold audience.

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